Large file not transferring locally

First of all I'm relatively new to IPFS so some of this issue may be with how I assume / hope network transfers work and not how they actually work. If so please close and point me to the documentation that relates. However based on the talk video I think I understand how it's supposed to work.

I have a unique file (10G), and add it to my local store. I send the hash to another user with a computer connected to the same local network. After the add is completed he ran 'ipfs cat hash >> foo.mp4' and the transfer did seem to run, but slowly, about the speed that I'd be able to upload to the internet from my computer.

It's my assumption that IPFS should be choosing the fastest path to connect, and since we're both on the local network, both can see each other in the ipfs swarm peers list (192.168.x.x), shouldn't the transfer be a very fast local LAN transfer? Based purely on speed and looking at what processes are sending what data where (using iftop on the linux machine and iState Menu on the mac) it seems like the transfer is going through the internet.

Am I completely confused as to how IPFS is supposed to work, or is there something I need to do to tell the daemon to prefer transfers from the local lan and not going out over the wan.